What the hell is going on?
All The Way Up
Bitcoin is way, way up in spite — or, perhaps, because — of the tumult in the rest of the financial world.
As Decrypt notes, the cryptocurrency rose nearly 20 percent in value over the last 24 hours alone, with the price currently hovering around $24,000, the highest it’s been in over a week.
The crypto market on the whole shot up $70 million over roughly the same time span, CNBC reports, bringing the market back to over the $1 trillion threshold.
The surge comes on the heels of regulators shutting down Silicon Valley Bank and crypto lender Signature Bank, as well as the fall of Silvergate Capital, which also lent to the crypto sector.
To be clear, it’s not just a coincidence; these two seemingly opposite trajectories are likely related.
The SVB withdrawal frenzy and subsequent closure initially lead to a crypto freakout after blockchain companies disclosed their significant holdings in the bank en masse.
But given the latest news, Bitcoin is emerging as a key player as investors are desperately trying to find new footholds.
As the dust from the SVB debacle settles, it now appears that crypto has not only found equilibrium but is experiencing a rise in price thanks to regulators setting up an emergency insurance fund to repay Signature and SVB’s clients, as CNBC reports, a move that has clearly reassured panicked investors.
“Given the Fed announcement over the weekend of a backstop for banks and specifically Silicon Valley Bank, markets have turned euphoric knowing that depositors’ money is safe and a major potential bank run has been averted,” Vijay Ayyar, an executive at the crypto exchange Luno, told CNBC.
This sort-of-bailout, while unpopular with Wall Street, was intended by regulators to stem the tide of a roiling financial crisis.
For all intents and purposes, it seems like it’s working — at least in the crypto sector.
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